Ross Gittins Misunderstands Libertarianism and Economics

Review of Ross Gittins, “Economists’ views more political than they admit,” SMH, Feb 7, 2011.

Gittins continues his long history of going out of his way to pretend that the Austrian school of economics does not exist. He says:

[I]n principle, all economists accept there can be instances of “market failure”. Even the libertarians accept markets can’t be relied on to protect the private property rights of the individual. So they support government intervention to provide law, order and defence. [My emboldening.]

Wrong. The Austrian school of economics, as represented by Murray Rothbard (the one man often called Mr. Libertarian), and other students of Ludwig von Mises, do not believe there is any role for government anywhere, including law, order and defence. Why has Gittins never engaged with the Austrian school? What is he afraid of? (Austrian arguments can easily be found in the middle and right columns of Economics.org.au.) Gittins constantly repeats the same criticism of economists — that they assume individuals are rational, that they make value-judgements, etc. — ignoring the fact that none of these criticisms apply to the Austrian school. For one more blatant example from today:

Like beauty and fairness, wastefulness lies in the eye of the beholder; it’s a value judgment, not something that proceeds from value-free economic analysis (which doesn’t exist).

It does exist. Check out, for example, the five value-free economic truths of huge explanatory value in the “SHOTS” tab of the “OUR REASONING” section of the middle column of Economics.org.au. Do it. Now.

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Ross Gittins Fails to Comprehend Subjectivity of Value

Gittins says, “New principle of balancing public and private interests is needed.” He never defines the terms “public” and “private”. If he had tried to, he would have seen just how arbitrary any limitation on the market is. Everything could be considered public, if you have enough time on your hands, university professors to employ or think tanks to commission. Gittins fails to understand that government is just a group of people with no justifiable claim to anything beyond their capacities as private citizens. As Murray Rothbard said, “[T]here is no entity called ‘government’; there are only people forming themselves into groups called ‘governments’ and acting in a ‘governmental’ manner. All property is therefore always ‘private’; the only and critical question is whether it should reside in the hands of criminals or of the proper and legitimate owners.”

That Gittins fails to comprehend the subjectivity of value is clear from his use of the concept of positional goods. He says, “When, rather than buying a perfectly satisfactory locally made Toyota for $30,000, for instance, we prefer to buy an imported BMW for $100,000, we’re spending $30,000 on a car and $70,000 on a positional good.” It could be argued that every single good is a positional good, or at least that a component of their psychic value is. Surely, Gittins’ recommended $30,000 Toyota could also be called a positional good, since most car owners could get around easily enough with no car, by relying on public transport, walking, etc, but they decide not to do so because it would then appear to their friends, family and colleagues that they are not doing so well. On what criteria would Gittins deny that all cars are positional goods? And how about schooling?

Gittins, in the aforementioned article, is using the argument to suggest limitations on government interference, but a bad argument is a bad argument. Moreover, it provides a confusing and misleading argument for already existing government interference, and it can also easily be used to argue for expansion of government into everything that could be argued to be non-positional and much further.

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Gittins’ Intellectual Numbness and Interdisciplinary Arrogance

Gittins’ empty legal blather: Ross Gittins, a man who has never said a word about legal theory, insists ad nauseum — without any supporting argument whatsoever (or any reference to any) — that all resources in Australia are the property of every Australian. Has Gittins sworn a vow of secrecy never to divulge his theory of property rights to readers?

Gittins’ appeal to authority: Gittins endlessly heralds the senior position that the mining tax advocates are in as an argument in their favour. If he is going to go respecting people just because they have a “respectable” title next to their name, then how does he deal with other people in “respectable” positions who disagree with “respectable” people who happen to be Gittins’ own favourites? If Gittins wants to play the “respectability” card, then he must show Nobel Laureate F.A. Hayek the same or perhaps more respect than he shows the mining tax advocates. So much for the argument from “respectability”.

Gittins’ ignorance of economics: What of the actual economics? Gittins says that taxing the mining industry, according to the proposed mining tax scheme, would have a “neutral” effect on the mining industry, as only “excess” profits would be taken away. He has refused to say where Murray Rothbard’s refutation of “neutral” taxation, available briefly and brilliantly here and at length here, is wrong.

Lest you think I’m making this up, here is Gittins today: Continue reading

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Corrections to “Miners moan, but we need our fair share”

Review of Ross Gittins, “Miners moan, but we need our fair share,” Sydney Morning Herald, August 14, 2010. The key message of the piece is:

It’s not hard to see why miners would object to paying more tax, but the tax was recommended by the Henry tax review and it is hard to see why these eminent economists would advocate a tax that could damage the economy.

The very reason for levying a tax on the “economic rent” derived from mining (that is, on the “super-normal profit” earned in excess of the “normal profit” needed to keep the mining companies’ resources employed in the mining business) is to ensure the tax does not discourage mining activity.

The three main errors are:

  1. Eminent “economists” often advocate damaging policies due to economic ignorance. A glimpse through history will tell you that, no matter your ideological position.
  2. No attempt is made to establish how taxation is justified from a property rights point of view. Are you really claiming that all land is government land, and they just licence it to the people? If so, please explain how government originally acquired that right.
  3. There is no such thing as neutral taxation, as Murray Rothbard explained brilliantly and briefly here (pp. 919-27 and, even shorter, pp. 1244-45), and, at length, here.
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Chris Leithner’s The Evil Princes of Martin Place: The book Ross Gittins is too cowardly to review

My review is here. Where is Ross Gittins’ review? Where has he engaged with the Austrian theory of the business cycle at all? How many more column kilometres does he want?

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I Am #1

Search for Ross Gittins The Happy Economist in google and the exclusive and scandalous Economics.org.au interview with him here ranks number 1. Hopefully this will make it more difficult for Gittins to get away with his misrepresentations of economics and taxpayers.

Shit-stirring at its finest.

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Gittins Misrepresents Taxpayers and Ignores Incentive Problem

Review of Gittins, “Aged care dilemma: tap wealth in homes, or let taxpayers pay,” SMH, Jan 26, 2011.

Gittins says, “We all agree that old people must be adequately cared for in their declining years and that governments must ensure this happens.” To disprove this comment nothing more need be said than: I disagree. What Gittins is saying is that we should not have to save for our old age, but that we should be able to rely on a protection racket to force everyone else to provide for us. Also, as any economist would point out, and oppose on this ground alone, there is a huge incentive problem: why should anyone provide for their old age out of their own pockets, when they’ve been forced to fund everyone else’s old age during their working life, and when they know that government will provide for them in their old age?

Gittins says, “The scope for duck-shoving — the temptation to push costs off on to someone else, particularly the anonymous taxpayer — is enormous. Trouble is, governments represent the taxpayer.” The government does not represent the taxpayer. The taxpayer never signed any contract allowing any public official to represent him anywhere at all. Moreover, many taxpayers voted against the government, were fined for not voting, were forced to pay tax, were imprisoned for tax evasion; and Gittins says these people are represented by government? That’s almost as bad as Gittins calling himself an economist.

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Steve Kates gives Ross Gittins another lesson

Steve Kates’ says: “Gitt[i]ns wrote about how original Keynesian ideas were when first put forward in 1936 and I pointed out that these supposedly original ideas were part of an ancient tradition in economic thought that had until then been universally rejected by the mainstream of the profession.” What Kates is responding to is this statement from Gittins:

There aren’t many new ideas in economics, just old ideas tarted up. Keynes’s ideas were new, Continue reading

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Steven Kates puts Gittins to shame on Say’s Law and the GFC

Check out Steven Kates’ incisive article here. Perhaps someone like Ross Gittins, who is meant to write three columns a week on economic issues, may in the next few years find time to address this issue. Excerpt: Continue reading

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Ross Gittins Wants Government to Provide Education for Education’s Sake

How else is one to read this?

How is compulsory provision of education justified? Because Gittins values knowledge for its own sake. Okay, now, should we increase funding? Oh yes, because we value knowledge for its own sake. How long before the government publishes mass editions for free distribution of Bertrand Russell’s “‘Useless’ Knowledge” and forces kids to read it? Perhaps Gittins can even turn Albert Jay Nock into an excuse for government intervention.

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Ross Gittins Hypocritically Complains Real Debate Avoided

Three recent Gittins essays (“Blowing the whistle on unfair costings game,”SMH, August 16; “Both sides fall victim to federal budget humbuggery,” SMH, August 20; “The deficit we really should worry about,” SMH, August 21) have him hypocritically complaining that the election has avoided debate on crucial economic issues.

This criticism is a bit rich coming from Gittins. In his recent book, The Happy Economist, he avoided any discussion on the division of labour, on whether utility can be measured, on what property rights are. He has repeatedly ignored the Austrian school and its success in predicting and explaining the business cycle. In his advocacy of the mining tax, he has failed to explain why he claims that everything a mining entrepreneur discovers actually belongs to the entire Australian population, and failed to deal with the Austrian observation that neutral taxation is a myth.

Every issue Gittins talks about, he ignores the central issue. It is obviously not out of cowardice, since he has the gall to complain when the political parties do the exact same thing. What bravery. A lesser being might have led by example or cultivated his own garden before looking elsewhere. But Gittins is too big a man for that.

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